Logistics Outsourcing as Cost and Quality Advantage

Client Challenge

  • Our clients, the Chief Executive Officer (CEO) and the Chief Administrative Officer (CAO) of a fast moving consumer goods retailer with nearly 600 branches in Germany, were faced with the challenge that the logistic processes were neither as cost-effective as could be desired nor sufficiently efficient.
  • As a group subsidiary, the company had to rely on the logistics of the entire group. The other business units of the group, however, were much bigger and belonged to different industries from the business unit of our client. Therefore, our client always felt like an “appendage” and was unable to take action that was in conformity with market trends.

Mandat Intervention

  • Together with the management, we drafted a future-oriented logistics concept, carefully weighing the pros and cons of outsourcing the logistics business. After intensive discussion, including with the group management, a fundamental decision was reached in favor of logistics outsourcing.
  • Together with the persons responsible at our client’s business unit and the parent company, Mandat outlined the relevant process landscape forming the basis of a call for tenders. The requirements of the branches played a decisive role in this process. We analyzed the storage data and quantity structures and corrected obvious mistakes.
  • We drew up a call for tenders which we sent to a number of qualified logistics providers. Based on the results of the call for tenders we created a shortlist and helped our client to negotiate the basic services until a decision was made in favor of one logistics partner.
  • After a fundamental decision for the most promising logistics partner, we conducted negotiations in a large number of meetings with the lawyers and professional experts on both sides. We prepared a basis for a contract and led both partners to an effective solution acceptable for all those involved.
  • We supported our client until the start of operations of the new warehouse and the logistics alliance.

Results

  • A joint venture between the retail company and the logistics provider was planned and implemented and is running successfully.
  • The separation from the logistics of the parent company was carried out without problems and in the agreed manner.
  • The overall logistics costs have gone down to approx 4% of turnover.

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